iQIYI Announces First Quarter 2022 Financial Results


BEIJING, May 26, 2022 /PRNewswire/ — iQIYI, Inc. (Nasdaq: IQ) (“iQIYI” or the “Company”), an innovative market-leading online entertainment service in China, today announced its unaudited financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

Total revenues were RMB7.3 billion (US$1.1 billion1), decreasing 9% year over year. Membership services revenue was RMB4.5 billion (US$705.4 million), increasing 4% year over year. Operating income was RMB93.4 million (US$14.7 million) and operating income margin was 1%, compared to operating loss of RMB1.0 billion and operating loss margin of 13% in the same period in 2021. Non-GAAP operating income2 was RMB326.6 million (US$51.5 million) and non-GAAP operating income margin was 4%, compared to non-GAAP operating loss of RMB658.2 million and non-GAAP operating loss margin of 8% in the same period in 2021. Net income attributable to iQIYI was RMB169.1 million (US$26.7 million), compared to net loss attributable to iQIYI of RMB1.3 billion in the same period in 2021. Non-GAAP net income attributable to iQIYI2 was RMB162.2 million (US$25.6 million), compared to non-GAAP net loss attributable to iQIYI of RMB1.0 billion in the same period in 2021.

“During the first quarter of 2022, we delivered a select portfolio of premium shows, bringing membership services growth; we improved our operating efficiency, leading to margin expansion and profits. Our new strategy cemented our market leadership while yielding healthy financial performance.” commented Mr. Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. “Going forward, we will adhere to the same strategy, which will create value for all stakeholders within our ecosystem, including our users and our shareholders.”

“Our gross margin consistently expanded in the last three quarters, and reached a historical high in the first quarter of 2022. Our operating expenses on the other hand decreased consistently in the last three quarters as well.” commented Mr. Jun Wang, Chief Financial Officer of iQIYI. “Behind these numbers are our unyielding efforts in improving operational efficiency and scalability to better position ourselves for the growth opportunities in long run.”

First Quarter 2022 Financial Highlights

Three Months Ended

(Amounts in thousands of Renminbi (“RMB”), except for number
of shares and per ADS data, unaudited)

March 31,

December 31,

March 31,

2021

2021

2022

RMB

RMB

RMB

Total revenues

7,968,423

7,388,558

7,277,059

Operating (loss)/income

(1,014,211)

(975,227)

93,413

Operating (loss)/income (non-GAAP)

(658,178)

(515,539)

326,555

Net (loss)/income attributable to iQIYI, Inc.

(1,267,010)

(1,775,787)

169,093

Net (loss)/income attributable to iQIYI, Inc. (non-GAAP)

(1,020,459)

(1,001,851)

162,189

Diluted net (loss)/income per ADS

(1.61)

(2.24)

0.21

Diluted net (loss)/income per ADS (non-GAAP)2

(1.30)

(1.26)

0.20

 

First Quarter 2022 Other Operating Highlights

The average daily number of total subscribing members3 for the quarter was 101.4 million, compared to 105.4 million for the same period in 2021 and 97.0 million for the fourth quarter in 2021. The average daily number of subscribing members excluding individuals with trial memberships4 for the quarter was 100.8 million, compared to 104.3 million for the same period in 2021 and 96.4 million for the fourth quarter in 2021. The monthly average revenue per membership (ARM5) for the first quarter was RMB14.69, compared to RMB13.64 for the same period in 2021 and RMB14.16 for the fourth quarter in 2021, increasing 8% year over year and 4% quarter over quarter.

Footnotes:

[1] Unless otherwise noted, RMB to USD was converted at an exchange rate of RMB6.3393 as of March 31, 2022, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. Translations are provided solely for the convenience of the reader.

[2] Non-GAAP measures are defined in the Non-GAAP Financial Measures section (see also “Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures” for more details).

[3] The average daily number of total subscribing members for a quarter is calculated by averaging the number of total subscribing members in each day of such quarter.

[4] The average daily number of subscribing members excluding individuals with trial memberships for the quarter is calculated by averaging the number of subscribing members excluding individuals with trial memberships in each day of such quarter.

[5] The monthly ARM for the quarter is calculated by dividing our total revenues from membership services during a given quarter by the average daily number of total subscribing members for that quarter and the number of months in the quarter.

First Quarter 2022 Financial Results

Total revenues reached RMB7.3 billion (US$1.1 billion), decreasing 9% year over year.

Membership services revenue was RMB4.5 billion (US$705.4 million), increasing 4% year over year, primarily attributable to the increase in ARM, as we launched a variety of premium content that elevated user experiences.

Online advertising services revenue was RMB1.3 billion (US$211.0 million), decreasing 30% year over year, primarily due to challenging macroeconomic environment and our new strategy leading to fewer number of variety shows launched.

Content distribution revenue was RMB626.1 million (US$98.8 million), decreasing 20% year over year, primarily due to the decrease in the value of barter transactions.

Other revenues were RMB842.2 million (US$132.8 million), decreasing 12% year over year, primarily due to the soft performance of various business lines.

Cost of revenues was RMB6.0 billion (US$940.8 million), decreasing 16% year over year, primarily due to lower content costs during the quarter. Content costs as a component of cost of revenues were RMB4.4 billion (US$693.5 million), decreasing 19% year over year. The decrease in content cost resulted from our improvement in content strategy, fewer number of variety shows launched, and improvement in operating efficiency.

Selling, general and administrative expenses were RMB744.8 million (US$117.5 million), decreasing 38% year over year, primarily due to a decrease in marketing spending, personnel-related compensation expenses, share-based compensation expenses, and to a lesser extent of RMB90.8 million (US$14.3 million) government subsidies received as a reduction to the designated operating expenses.

Research and development expenses were RMB475.0 million (US$74.9 million), decreasing 29% year over year, primarily due to the decrease of personnel-related compensation expenses.

Operating income was RMB93.4 million (US$14.7 million), compared to operating loss of RMB1.0 billion in the same period in 2021. Operating income margin was 1%, compared to operating loss margin of 13% in the same period in 2021. Non-GAAP operating income was RMB326.6 million (US$51.5 million) and non-GAAP operating income margin was 4%, compared to non-GAAP operating loss of RMB658.2 million and non-GAAP operating loss margin of 8% in the same period in 2021.  

Total other income was RMB97.3 million (US$15.4 million), compared to total other expense of RMB222.4 million during the same period of 2021. The year over year variance was a combination of the disposal gain derived from deconsolidation due to change in control of subsidiaries, impairment of long-term investments, and decreased interest expenses of RMB155.1 million (US$24.5 million) mainly due to the adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity and less principal amount of convertible bond.

Income before income taxes was RMB190.7 million (US$30.1 million), compared to loss before income taxes of RMB1.2 billion in the same period in 2021.

Income tax expense was RMB16.9 million (US$2.7 million), compared to income tax expense of RMB20.6 million in the same period in 2021.

Net income attributable to iQIYI was RMB169.1 million (US$26.7 million), compared to net loss attributable to iQIYI of RMB1.3 billion in the same period in 2021. Diluted net income attributable to iQIYI per ADS was RMB0.21 (US$0.03) for the first quarter of 2022, compared to diluted net loss attributable to iQIYI per ADS of RMB1.61 in the same period of 2021. Non-GAAP net income attributable to iQIYI was RMB162.2 million (US$25.6 million), compared to non-GAAP net loss attributable to iQIYI of RMB1.0 billion in the same period in 2021. Non-GAAP diluted net income attributable to iQIYI per ADS was RMB0.20 (US$0.03), compared to non-GAAP diluted net loss attributable to iQIYI per ADS of RMB1.30 in the same period of 2021.

As of March 31, 2022, the Company had cash, cash equivalents, restricted cash and short-term investments of RMB5.2 billion (US$814.8 million).

Conference Call Information

iQIYI’s management will hold an earnings conference call at 7:00 AM on May 26, 2022, U.S. Eastern Time (7:00 PM on May 26, 2022, Beijing Time).

Please register in advance of the conference using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode and unique registrant ID by email.

Participant Online Registration:

http://apac.directeventreg.com/registration/event/5885486

It will automatically direct you to the registration page of “iQIYI First Quarter 2022 Earnings Conference Call”, where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter “5885486“.

In the 10 minutes prior to the call start time, you may use the conference access information (including dial-in number(s), Direct Event passcode and unique registrant ID) provided in the confirmation email that you have received following your pre-registration.

A telephone replay of the call will be available after the conclusion of the conference call through June 3, 2022.

Dial-in numbers for the replay are as follows:

International Dial-in 

+61 2 8199 0299

Passcode:    

5885486

A live and archived webcast of the conference call will be available at http://ir.iqiyi.com/.

About iQIYI, Inc.

iQIYI, Inc. is an innovative market-leading online entertainment service in China. Its corporate DNA combines creative talent with technology, fostering an environment for continuous innovation and the production of blockbuster content. We produce, aggregate and distribute a wide variety of professionally produced content, or PPC, as well as a broad spectrum of other video content in a variety of formats.  The Company distinguishes itself in the online entertainment industry by its leading technology platform powered by advanced AI, big data analytics and other core proprietary technologies. iQIYI attracts a massive user base with tremendous user engagement, and has developed a diversified monetization model including membership services, online advertising services, content distribution, online games, live broadcasting, IP licensing, talent agency, online literature, etc.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “confident” and similar statements. Among other things, the quotations from management in this announcement, as well as iQIYI’s strategic and operational plans, contain forward-looking statements. iQIYI may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including but not limited to statements about iQIYI’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: iQIYI’s strategies; iQIYI’s future business development, financial condition and results of operations; iQIYI’s ability to retain and increase the number of users, members and advertising customers, and expand its service offerings; competition in the online entertainment industry; changes in iQIYI’s revenues, costs or expenditures; Chinese governmental policies and regulations relating to the online entertainment industry, general economic and business conditions globally and in China and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in the Company’s filings with the Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release, and iQIYI undertakes no duty to update such information, except as required under applicable law.

Non-GAAP Financial Measures

To supplement iQIYI’s consolidated financial results presented in accordance with GAAP, iQIYI uses the following non-GAAP financial measures: non-GAAP operating (loss)/income, non-GAAP operating (loss)/income margin, non-GAAP net (loss)/income attributable to iQIYI, non-GAAP diluted net (loss)/income attributable to iQIYI per ADS and free cash flow. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

iQIYI believes that these non-GAAP financial measures provide meaningful supplemental information regarding its operating performance by excluding certain items that may not be indicative of its business operating results, such as operating performance excluding non-cash charges or non-operating in nature. The Company believes that both management and investors benefit from referring to the non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to iQIYI’s historical operating performance. The Company believes the non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that the non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company’s results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data.

Non-GAAP operating (loss)/income represents operating (loss)/income excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations and non-recurring employee severance costs.

Non-GAAP net (loss)/income attributable to iQIYI, Inc. represents net (loss)/income attributable to iQIYI, Inc. excluding share-based compensation expenses, amortization and impairment of intangible assets resulting from business combinations, non-recurring employee severance costs, disposal gain or loss, impairment of long-term investments, fair value change of long-term investments, adjusted for related income tax effects. iQIYI’s share of equity method investments for these non-GAAP reconciling items, amortization and impairment of intangible assets not on the investees’ books, accretion of their redeemable non-controlling interests, and the gain or loss associated with the issuance of shares by the investees at a price higher or lower than the carrying value per shares, adjusted for related income tax effects, are also excluded.

Non-GAAP diluted net (loss)/income per ADS represents diluted net (loss)/income per ADS calculated by dividing non-GAAP net (loss)/income attributable to iQIYI, Inc, which is adjusted for accretion for the redeemable non-controlling interests, by the weighted average number of ordinary shares expressed in ADS.

Free cash flow represents net cash provided by operating activities less capital expenditures.

For more information, please contact:

Investor Relations
iQIYI, Inc.
+ 86 10 8264 6585
[email protected]

 

 

 

iQIYI, INC.

Condensed Consolidated Statements of (Loss)/Income

 (In RMB thousands, except for number of shares and per share data) 

Three Months Ended

March 31,

December 31,

March 31,

2021

2021

2022

RMB

RMB

RMB

(Unaudited)

(Unaudited)

(Unaudited)

 Revenues:

Membership services

4,311,804

4,120,689

4,471,475

Online advertising services

1,916,584

1,664,502

1,337,299

Content distribution

779,058

761,519

626,116

Others

960,977

841,848

842,169

 Total revenues

7,968,423

7,388,558

7,277,059

 Operating costs and expenses:

Cost of revenues

(7,109,394)

(6,507,554)

(5,963,853)

Selling, general and administrative

(1,200,984)

(1,093,088)

(744,781)

Research and development

(672,256)

(763,143)

(475,012)

 Total operating costs and expenses

(8,982,634)

(8,363,785)

(7,183,646)

 Operating (loss)/income

(1,014,211)

(975,227)

93,413

Other income/(expense):

Interest income

28,569

24,836

8,947

Interest expenses

(330,585)

(324,542)

(175,515)

Foreign exchange (loss)/gain, net

(13,193)

27,882

(9,017)

Share of losses from equity method investments

(3,076)

(361,672)

(3,158)

Others, net

95,846

(119,918)

276,076

Total other (expense)/income, net

(222,439)

(753,414)

97,333

(Loss)/income before income taxes

(1,236,650)

(1,728,641)

190,746

Income tax expense

(20,613)

(36,536)

(16,882)

 Net (loss)/income

(1,257,263)

(1,765,177)

173,864

  Less: Net income attributable to noncontrolling interests 

9,747

10,610

4,771

 Net (loss)/income attributable to iQIYI, Inc.

(1,267,010)

(1,775,787)

169,093

  Accretion of redeemable noncontrolling interests

(3,194)

(8,030)

 Net (loss)/income attributable to ordinary shareholders

(1,270,204)

(1,783,817)

169,093

Net (loss)/income per share for Class A and Class B ordinary shares:

 Basic

(0.23)

(0.32)

0.03

 Diluted

(0.23)

(0.32)

0.03

Net (loss)/income per ADS (1 ADS equals 7 Class A ordinary shares):

 Basic

(1.61)

(2.24)

0.21

 Diluted

(1.61)

(2.24)

0.21

Weighted average number of Class A and Class B ordinary shares used in net loss per
share computation:

 Basic

5,526,721,856

5,595,304,683

5,706,290,530

 Diluted

5,526,721,856

5,595,304,683

5,742,801,024

 

 

 

iQIYI, INC.

Condensed Consolidated Balance Sheets

(In RMB thousands, except for number of shares and per share data)

December 31,

March 31,

2021

2022

RMB

RMB

(Unaudited)

ASSETS

    Current assets:

Cash and cash equivalents

2,997,212

3,811,350

Restricted cash

77,652

71,426

Short-term investments

1,348,255

1,282,522

Accounts receivable, net

2,747,774

2,672,284

Prepayments and other assets

3,266,523

2,689,541

Amounts due from related parties

155,512

139,450

Licensed copyrights, net

931,189

910,096

    Total current assets

11,524,117

11,576,669

    Non-current assets:

Fixed assets, net

1,344,784

1,335,804

Long-term investments

3,035,155

3,213,112

Deferred tax assets, net

31,351

31,344

Licensed copyrights, net

7,258,042

7,096,355

Intangible assets, net

545,305

479,785

Produced content, net

10,951,078

12,032,315

Prepayments and other assets

2,905,690

3,011,168

Operating lease assets

907,297

857,893

Goodwill

3,888,346

3,888,346

Amounts due from related parties

81,000

64,000

    Total non-current assets

30,948,048

32,010,122

Total assets

42,472,165

43,586,791

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’
EQUITY

Current liabilities:

Accounts and notes payable

8,896,460

7,022,179

Amounts due to related parties

2,634,089

3,167,108

Customer advances and deferred revenue

3,484,509

3,836,864

Short-term loans

4,117,774

4,391,464

Operating lease liabilities, current portion

171,541

199,963

Accrued expenses and other liabilities

3,172,097

2,862,298

    Total current liabilities

22,476,470

21,479,876

Non-current liabilities:

Convertible senior notes

12,652,172

13,239,128

Deferred tax liabilities

3,127

598

Amounts due to related parties

780,615

120,732

Operating lease liabilities

625,737

564,702

Other non-current liabilities

260,931

1,280,639

    Total non-current liabilities

14,322,582

15,205,799

Total liabilities

36,799,052

36,685,675

Redeemable noncontrolling interests

397,385

Shareholders’ equity:

Class A ordinary shares

173

193

Class B ordinary shares

183

193

Additional paid-in capital

49,642,014

50,243,684

Accumulated deficit

(47,163,773)

(46,193,592)

Accumulated other comprehensive income

2,709,002

2,782,550

Non-controlling interests

88,129

68,088

Total shareholders’ equity

5,275,728

6,901,116

Total liabilities, redeemable noncontrolling interests and shareholders’ equity

42,472,165

43,586,791

 

 

 

iQIYI, INC.

Condensed Consolidated Statements of Cash Flows 

 (In RMB thousands, except for number of shares and per share data)

Three Months Ended

March 31,

December 31,

March 31,

2021

2021

2022

RMB

RMB

RMB

(Unaudited)

(Unaudited)

(Unaudited)

Net cash used for operating activities

(1,350,028)

(1,095,365)

(1,167,049)

Net cash (used for)/provided by investing activities (1,2)

(2,777,975)

2,097,104

(67,305)

Net cash provided by/(used for) financing activities

610,991

(5,238,940)

2,046,550

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(28,225)

(73,767)

(4,284)

Net (decrease)/increase in cash, cash equivalents and restricted cash

(3,545,237)

(4,310,968)

807,912

Net cash used for operating activities

(1,350,028)

(1,095,365)

(1,167,049)

Less: Capital expenditures (2)

(60,550)

(23,938)

(51,315)

Free cash flow

(1,410,578)

(1,119,303)

(1,218,364)

(1)       Net cash provided by or used for investing activities primarily consists of net cash flows from investing in debt securities, purchase of
long-term investments and capital expenditures.

(2)       Capital expenditures are incurred primarily in connection with leasehold improvements, computers and servers.

 

 

 

iQIYI, INC.

Reconciliations of Non-GAAP Financial Measures to the Nearest Comparable GAAP Measures

(Amounts in thousands of Renminbi (“RMB”), except for per ADS information, unaudited)

Three Months Ended

March 31,

December 31,

March 31,

2021

2021

2022

RMB

RMB

RMB

Operating (loss)/income

(1,014,211)

(975,227)

93,413

Add: Share-based compensation expenses

343,567

264,458

216,644

Add: Amortization and impairment of intangible assets(1)

12,466

16,498

16,498

Add: Non-recurring employee severance costs(2)

178,732

Operating (loss)/income (non-GAAP)

(658,178)

(515,539)

326,555

Net (loss)/income attributable to iQIYI, Inc.

(1,267,010)

(1,775,787)

169,093

Add: Share-based compensation expenses

343,567

264,458

216,644

Add: Amortization and impairment of intangible assets(1)

12,466

16,498

16,498

Add: Non-recurring employee severance costs(2)

178,732

Add: Disposal (gain)/loss

(429,916)

Add: Impairment of long-term investments

138,979

182,277

Add: Fair value (gain)/loss of long-term investments

(88,236)

1,396

(792)

Add: Reconciling items on equity method investments

(19,580)

177,191

10,914

Add: Tax effects on non-GAAP adjustments(3)

(1,666)

(3,318)

(2,529)

Net (loss)/income attributable to iQIYI, Inc. (non-GAAP)

(1,020,459)

(1,001,851)

162,189

Diluted net (loss)/income per ADS

(1.61)

(2.24)

0.21

Add: Non-GAAP adjustments to earnings per ADS

0.31

0.98

(0.01)

Diluted net (loss)/income per ADS (non-GAAP)

(1.30)

(1.26)

0.20

(1)         This represents amortization and impairment of intangible assets resulting from business combinations.

(2)         This represents non-recurring employee severance costs in relation to the employee optimization program incurred in 2021.

(3)         This represents tax impact of all relevant non-GAAP adjustments.

 


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